Control rooms  |   Narrowband  |   Broadband  |   Critical IoT  |   Video  |  2024-11-08

Motorola Solutions Reports Third-Quarter 2024 Financial Results with Strong P25 System Sales

Source: The Critical Communications Review | Gert Jan Wolf editor

Company reports record Q3 revenue, earnings and cash flow and strong growth across the board.

Motorola Solutions, Inc. (NYSE: MSI) today reported its earnings results for the third quarter of 2024.

Company again raises full-year revenue and earnings outlook following strong Q3 results

  • Sales of $2.8 billion, up 9% versus a year agoProducts and Systems Integration sales up 11%
  • Software and Services sales up 7%; up 13%1 excluding U.K. Home Office sales
  • GAAP earnings per share ("EPS") of $3.29, up 22% versus a year ago
  • Non-GAAP EPS2 of $3.74, up 17% versus a year ago
  • Operating cash flow of $759 million, up $45 million versus a year ago
  • Subsequent to quarter end, acquired an international provider of Command Center software solutions for $22 million, net of cash acquired.

“Our third-quarter results were exceptional, with record Q3 revenue, earnings and cash flow,” said Greg Brown, chairman and CEO, Motorola Solutions. “We achieved strong growth across the board, and I’m pleased with the momentum of our business. As a result, we’re again raising our revenue and earnings expectations for the full year.” 

OTHER SELECTED FINANCIAL RESULTS

  • Revenue - Sales were $2.8 billion, up 9% from the year-ago quarter driven by growth in North America and International. Revenue from acquisitions was $36 million and currency headwinds were $4 million in the quarter. The Products and Systems Integration segment grew 11%, driven by growth in Land Mobile Radio Communications ("LMR"). The Software and Services segment grew 7%, driven by growth in Video Security and Access Control ("Video") and Command Center, partially offset by lower revenue in the U.K. related to the Airwave Charge Control and the exit from the Emergency Services Network ("ESN") contract. Excluding the U.K. Home Office, Software and Services grew 13% with growth in all three technologies.
  • Operating margin - GAAP operating margin was 25.5% of sales, up from 25.0% in the year-ago quarter. Non-GAAP operating margin was 29.7% of sales, up 70 basis points from 29.0% in the year-ago quarter. The increase in both GAAP and non-GAAP operating margins was driven by higher sales, favorable mix and lower material costs, partially offset by the Airwave Charge Control and higher expenses related to investments in video and employee incentives.
  • Taxes - The GAAP effective tax rate during the quarter was 19.0%, down from 21.5% in the year-ago quarter. The non-GAAP effective tax rate was 20.6%, down from 22.7% in the year-ago quarter. Both the GAAP and non-GAAP rates decreased primarily due to higher benefits from share-based compensation recognized in the current quarter.
  • Cash flow - Operating cash flow was $759 million, compared to $714 million in the year-ago quarter and free cash flow was $702 million, up from $649 million in the year-ago quarter. Both the operating cash flow and free cash flow for the quarter increased primarily due to higher earnings in the current year, net of non-cash charges.
  • Capital allocation - During the quarter, the company paid $164 million in cash dividends, repurchased $31 million of common stock and incurred $57 million of capital expenditures. Additionally, the company closed the acquisitions of Noggin and a provider of vehicle location and management solutions in the financial services vertical for $223 million, net of cash acquired, and settled $313 million of senior notes that were due within the quarter. Subsequent to the quarter, the company acquired an international provider of Command Center software solutions, for $22 million, net of cash acquired.
  • Backlog - The company ended the quarter with backlog of $14.1 billion, down 1% or $178 million from the year-ago quarter. Products and Systems Integration segment backlog was down $712 million, or 15%, driven primarily by strong LMR shipments. Software and Services segment backlog was up $534 million, or 6%, driven by strong demand in all three technologies and favorable foreign currency rates, partially offset by the revenue recognition for the U.K. Home Office.

NOTABLE WINS AND ACHIEVEMENTS

Software and Services

$191M five-year LMR services award from the U.S. Navy
$100M+ five-year LMR services award for South Carolina's statewide network
$84M five-year LMR services award from a U.S. federal law enforcement agency
$30M Command Center order for the State of Utah
$24M Command Center order for Maricopa County Sheriff's Office, AZ
$18M mobile video order from São Paulo State Government, Brazil
Products and Systems Integration

$88M P25 system and device order for a customer in North Africa
$31M P25 system order for a U.S. state and local customer
$31M P25 system order for a county in Wisconsin
$25M P25 system expansion for Tennessee's statewide network
$23M P25 device order for a U.S. federal customer
$4M fixed video order for a U.S. federal customer

BUSINESS OUTLOOK

Full-year 2024 - The company now expects revenue growth of 8.25%, up from its prior guidance of approximately 8%, and non-GAAP EPS of between $13.63 and $13.68 per share, up from its prior guidance of between $13.22 and $13.30 per share. This outlook assumes a fully diluted share count of approximately 171 million shares and a non-GAAP effective tax rate of approximately 22.5%.
The company has not quantitatively reconciled its guidance for forward-looking non-GAAP metrics to their most comparable GAAP measures because the company does not provide specific guidance for the various reconciling items as certain items that impact these measures have not occurred, are out of the company’s control, or cannot be reasonably predicted. Accordingly, a reconciliation to the most comparable GAAP financial metric is not available without unreasonable effort. Please note that the unavailable reconciling items could significantly impact the company’s results.